Federal Reserve Bank: Dollar Tight on Fed Outcome
- The greenback was in a tight range in trading against in major peers on Thursday.
- As a response to election results, investors sold the dollar on Wednesday.
- The US Federal Reserve remained on steady as US political landscape shifted.
FEDERAL RESERVE BANK – On Thursday, the dollar was in a tight range as it traded against its major peers. This is amid the focus of investors on the interest rate decision of the Federal Reserve. This followed after the move of investors in the US midterm election results.
Meanwhile, the election results met the expectations of the market. The results revealed that the Congress was divided with Democrats winning the control on the House of Representatives. Meanwhile, Republicans dominated the Senate.
Initially, traders made a response regarding this result. On Wednesday, they sold the greenback amid the fade of an additional fiscal stimulus.
The dollar, however, recovered most of its losses in battling against the euro and yen by the US close. This is amid the shift of focus from politics to the monetary policy of the Fed. After a two-day meeting, the central bank’s Federal Open Market Committee (FOMC) will release its latest decision on Thursday.
For this year, the Fed has raised the rates three times. Further, this happened on the economic boom of the United States and the recovery of inflation.
Sim Moh Siong is a currency strategist at Bank of Singapore. According to him, “the dollar is likely to benefit as we still expect the Fed to maintain its hawkish stance.”
“The U.S. economy needs rising rates as wage pressures are building and there is a risk of an overheating of the economy,” he added.
Federal Reserve Bank: Fed remains on steady pace amid the shift of US political landscape
On Wednesday, the US Federal Reserve has started its policy meeting. This occurred amid the shift on US political landscape. However, the Fed is not confident in the recent economic data to change plans for a further rate hike in December.
The Fed could flag a possible slowdown in the housing market and a decline in business investment. With these two reasons on the table, the Fed thinks that the growth is receding. Meanwhile, both household spending and employment increase since the Fed meeting on September.
Usually, Fed meetings are during Tuesdays and Wednesday. However, this time the meeting was delayed a day due to the midterm congressional elections on Tuesday.